PSX soars 78% in 2024, secures second spot globally: report

• PSX’s market capitalisation remains at $50bn despite rally. 
• Decline is due to rupee devaluation, large dividend payouts.
• It could sustain positive rally if if political stability continues.
  

KARACHI: The Pakistan Stock Exchange (PSX) outshined other asset classes in the country for 2024, with its benchmark KSE-100 Index surging by 78%. 

This remarkable performance positioned PSX as the second-best performing stock market globally, trailing only Argentina, according to The News, citing a report by Topline Securities.

Over the last 18 months, the PSX delivered an impressive 177% return in USD terms (169% in PKR), driven by macroeconomic stabilisation and improved external accounts, said CEO of brokerage firm Topline Securities Mohammed Sohail in a post on LinkedIn on Saturday.

Despite the rally, the PSX’s market capitalisation remains at $50 billion, significantly below its 2017 peak of $100 billion. The decline is due to rupee devaluation, large dividend payouts and fewer new listings. As a percentage of GDP, the PSX is at 11%, compared to its 10-year average of 16% and a peak of 29% in 2017.

Trading activity surged to record highs, with average daily volumes in the ready/cash market reaching Rs54 billion ($190 million) in December, a significant rise from Rs22 billion earlier in 2024 and Rs10 billion in 2023.

Local mutual funds and insurance companies emerged as major buyers, capitalising on falling interest rates, while foreign investors were net sellers due to passive fund outflows. However, active Frontier funds showed confidence in the PSX, becoming net buyers in 2024.

Notable developments included the government raising Rs2 trillion through Sukuk bonds and the PSX witnessing seven new listings that generated Rs8.4 billion, the highest in three years, Sohail explained.

Looking ahead to 2025, the PSX — currently trading at a price-to-earnings (PE) ratio of 6x — could sustain its positive momentum if political stability continues, per Sohail’s estimates Ample liquidity in the system, alongside key events such as International Monetary Fund's reviews, privatisation efforts and potential credit rating upgrades, will be critical factors shaping the market’s trajectory.